This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Observations – For
Observations – Against
Many of the negatives are now priced into UK bank stocks, evident in their surprising resilience following a BoE rate cut – to a record low of 0.25% – with all three UK 100 uk-focused banks seeing shares remain positive or flat. Results season has seen cost-cutting and provisions for the future placed ahead of past performance. RBS is widely expected to post a 9th consecutive annual loss tomorrow according to broker Investec (rates RBS as ‘buy’), meaning decent potential for a positive surprise.
Shares trade at a 0.51x price/book value versus a 0.78x average for the 25 biggest European banks.
Brokers are neutral to bearish on the stock and, given the Bank of England over-delivered in its policy update the potential for revisions across the entire banking sector is high. We also note that 12 of 19 brokers have targets above the current price.
Next Event: Q2 results, 5 August
Latest Broker 12-Month Consensus: 27% Buy, 42% Hold, 31% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
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